Research Update: Avolon Holdings Ltd. Rating Raised To 'BBB-' From 'BB+' On Reduced Encumbered Assets; Outlook Stable

Avolon Holdings Funding Ltd., a wholly owned subsidiary of aircraft operating lessor Avolon Holdings Ltd., has issued $2.5 billion of unsecured notes; most of the proceeds will be used to repay secured debt, which will result in its secured debt as a percentage of total assets declining to about 30% This level is similar to 'BBB-' rated aircraft operating lessors. We are therefore raising our ratings on Avolon, including the issuer credit rating, to 'BBB-' from 'BB+' and removing the ratings from CreditWatch, where we placed them with positive implications on April 10, 2019. The outlook is stable, reflecting our expectation that Avolon's earnings and cash flow will continue to benefit from the growth of its aircraft fleet and the

...+ Avolon Holdings Funding Ltd., a wholly owned subsidiary of aircraft operating lessor Avolon Holdings Ltd., has issued $2.5 billion of unsecured notes; most of the proceeds will be used to repay secured debt, which will result in its secured debt as a percentage of total assets declining to about 30% + This level is similar to '###-' rated aircraft operating lessors. + We are therefore raising our ratings on Avolon, including the issuer credit rating, to '###-' from '##+' and removing the ratings from CreditWatch, where we placed them with positive implications on April 10, 2019. + The outlook is stable, reflecting our expectation that Avolon's earnings and cash flow will continue to benefit from the growth of its aircraft fleet and the strong demand for aircraft, with EBIT interest coverage in the mid-1x area and funds from operations (FFO) to debt of 9%-10% through 2020....

Research Update